Global Arms Market Sets Historic Record: Sales Rise to $679 Billion. Dynamics Analysis, Key Companies, and Investment Trends.
The global defense industry is experiencing unprecedented growth. According to the Stockholm International Peace Research Institute (SIPRI), the total revenue of the 100 largest arms manufacturers in 2024 rose nearly 6% to a record $679 billion. Over the last decade, worldwide arms sales have increased by 26%. Armed conflicts, geopolitical tensions, and a new arms race are driving this spiral of demand and profits for arms companies.
American Market Dominance
The United States maintains undisputed leadership in the global military-industrial complex. Five out of the six largest arms corporations in the world are American, including giants such as Lockheed Martin, RTX (Raytheon Technologies), Northrop Grumman, General Dynamics, and Boeing. American companies account for about half of total global arms sales (in 2024 – $334 billion).
The largest manufacturer, Lockheed Martin, increased its military revenue by 3.2% to $64.7 billion, breaking several years of stagnation. Other U.S. leaders also saw income growth for the first time since 2018.
Notably, SpaceX by Elon Musk has entered the list of the top 100 defense contractors globally for the first time, doubling its military project revenue over the year (to $1.8 billion). The appearance of SpaceX in the ranking highlights that even relatively new players with innovations can quickly carve out a significant niche amid rising demand.
Europe Accelerates Defense Industry
The European military-industrial complex is demonstrating the highest growth rates. In 2024, the combined revenue of 26 European companies listed by SIPRI (excluding Russia) rose by 13% to $151 billion, accounting for about 22% of the global arms market. European countries are ramping up arms and equipment production in response to the war in Ukraine and the increased threat from Russia. 23 out of 26 European firms increased sales, with some achieving impressive results:
- Rheinmetall (Germany) – 46.6% growth in defense revenue over the year due to demand for tanks, artillery, and munitions.
- Czechoslovak Group (Czech Republic) – Record growth of 193% (almost tripling to $3.6 billion) due to the production of around 1 million artillery shells for Ukraine as part of a Czech government initiative.
- JSC Ukrainian Defense Industry (Ukraine) – 41% growth (to $3 billion) due to mass production of arms for the country's own needs amid the war.
Russia's neighbors in Eastern Europe are also bolstering military-industrial capacity. Poland sharply increased its military budget (to 4.2% of GDP) and is investing in local production of military equipment and munitions. The European defense industry is experiencing a boom, though challenges such as supplier overload and material shortages loom ahead.
Russia: Growth Despite Sanctions
The Russian defense industry is showing steady growth despite sanctions and restrictions on access to components. Two Russian companies are present in the SIPRI ranking – the state corporation Rostec (7th in the world) and United Shipbuilding Corporation (41st). By the end of 2024, their combined revenue increased by 23% to $31.2 billion. Meanwhile, Rostec's revenue from arms sales grew by 26.4%, reaching approximately $27 billion.
Western sanctions have not halted production – explosive internal demand has compensated for declining exports. Russian factories have significantly boosted the production of munitions and equipment for the army. For instance, the output of 152 mm caliber artillery shells in Russia in 2024 was increased fivefold compared to pre-crisis levels. As a result, the Russian defense industry has remained resilient and, after stabilizing the situation, expects to return to global markets. The export intermediary Rosoboronexport has already formed a record portfolio of foreign contracts exceeding $60 billion, indicating deferred demand for Russian weapons.
Asia: New Leaders and China's 'Pause'
The Asian arms market is experiencing mixed trends. On one hand, South Korea has emerged as a growth leader: four South Korean companies from the Top 100 increased their total revenue by 31% (to $14.1 billion). Seoul is actively developing arms exports, signing multi-billion dollar contracts with European and Middle Eastern clients. For example, the Hanwha Group increased sales by 42%, reaching $8 billion, through the supply of self-propelled artillery and MLRS both domestically and abroad.
Other Asian manufacturers are also gaining traction. India is advancing an import substitution policy: three Indian companies in the SIPRI ranking increased their combined revenue by 8% (to $7.5 billion) due to government defense orders. The industry is developing in countries like Pakistan, Indonesia, and Taiwan, although their figures are currently modest.
On the other hand, China's growth has unexpectedly slowed – the second-largest arms market after the U.S. According to SIPRI's official data, the revenue of the eight largest Chinese arms companies in 2024 decreased by 10% to $88 billion. Some giants, like NORINCO, experienced a one-third drop in sales amid anti-corruption investigations and delays in government orders in China. Nevertheless, experts note that this 'pause' could be temporary: China continues a large-scale army modernization program, and its actual military spending is rising. The statistical decline may be attributable to one-off factors, and in the coming years, the Chinese defense industry is expected to return to growth, strengthening market competition.
Middle East Enters the Top
Countries in the Middle East and surrounding regions are rapidly increasing arms production, displacing traditional suppliers in certain markets. For the first time in the SIPRI ranking, there are nine companies from the Middle Eastern region with a total revenue of about $31 billion (+14% year-on-year). Notably, Israel: three Israeli defense companies (including Elbit Systems and Israel Aerospace Industries) collectively increased sales by 16%, to $16.2 billion. High demand for Israeli drones, missile defense systems, and precision weapons remains strong, despite geopolitical risks and criticism of Israel's actions – customers worldwide continue their purchases.
Turkey has solidified itself as an exporter of drones, armored vehicles, and missiles. Turkish companies (such as the drone manufacturer Baykar) received large orders from Ukraine, Asian countries, and Africa, bringing the export share to 95% in certain projects. The success of the Turkish defense industry is supported by active government backing and a focus on international markets.
The Persian Gulf is also emerging on the global stage. The United Arab Emirates has created a diversified conglomerate, EDGE Group, which reported arms sales of $4.7 billion in 2024. Saudi Arabia, Qatar, and other oil-rich countries are also investing billions of dollars in local production of drones, munitions, and military equipment, seeking to reduce dependence on imports and eventually become net exporters of arms.
Conclusions and Prospects for Investors
The record figures in the arms sector reflect a new reality: the world has entered an era of increased military spending and rearmament. For investors, the defense sector has become one of the most dynamically growing segments. Stocks of many arms companies have strengthened amid rising orders and government defense budgets. Major corporations are expanding production capacities, acquiring contractors, and preparing for years of increased demand.
In the short term, this trend is likely to continue. Ongoing conflicts and general geopolitical instability compel countries worldwide to spend more on security, ensuring arms firms have filled order books. However, risks also exist: shortages of skilled labor, supply chain disruptions, and political export restrictions could impact project profitability. Nevertheless, from an investment perspective, the global military-industrial complex is currently experiencing a resurgence reminiscent of the Cold War era, and many market players intend to capitalize on it.
